Guidance

Pension schemes newsletter 76 - February 2016

Published 18 February 2016

1. Relief at Source - annual returns of individual information

In Pension schemes newsletter 74 we reminded scheme administrators of pension schemes operating relief at source that the annual return of individual information (also known as the RPSCOM100(Z)) for the tax year 2014 to 2015 was due to be submitted to HM Revenue and Customs (HMRC) by 5 October 2015. We also explained why we needed this information and the consequences of failing to submit by the deadline.

There are still outstanding returns for both the 2013 to 2014 and 2014 to 2015 tax years.

Over the last year HMRC has been working with scheme administrators to help them submit their 2013 to 2014 annual returns of individual information. We will continue to do this for outstanding 2013 to 2014 returns but have now extended this work to include submission of the outstanding 2014 to 2015 returns.

As we explained in Pension schemes newsletter 72 we are carrying out this work in readiness for the introduction of the Scottish rate of Income Tax. It will be essential that the data submitted on the annual return of individual information is made on time and is accurate so that we can identify Scottish taxpayers and tell you the correct rate of tax to apply to your scheme members in advance of the next tax year.

Scheme administrators have three opportunities to submit the 2014 to 2015 annual return successfully. If failure occurs on the third submission we will stop all future interim repayments until a further re-submission is received and deemed successful.

So that we can continue to help scheme administrators successfully submit their annual return of individual information please give us up to date contact details. You can email these to:

pensions.businessdelivery@hmrc.gsi.gov.uk

and put ‘relief at source - SRIT’ in the subject line of your email.

2. Lifetime allowance reduction

a. Interim process for applying for Individual Protection 2016 (IP2016) and Fixed Protection 2016 (FP2016)

In Pension schemes newsletter 74 and Pension schemes newsletter 75 we provided information about applying for IP2016 and FP2016 using the interim process and the online digital process.

Members planning on taking benefits between 6 April 2016 and July 2016 can apply for FP2016 or IP2016 using the interim application process. To help members with this and so that we receive the correct information for us to process the applications, we have produced pro forma letter text for members to apply for both FP2016 and IP2016. Members can reproduce this text, add in their details and send to:

Pension Schemes Services
Fitzroy House
Castle Meadow Road
Nottingham
NG2 1BD

As we explained, scheme members can’t apply for FP2016 or IP2016 before 6 April 2016 because as part of the application members must provide certain values or make declarations relating to their pension savings as at 5 April 2016.

So because scheme members cannot provide these values or make these declarations before 6 April 2016, we are unable to process any interim applications for protection that are received before this date. Any requests received before 6 April 2016 will not be retained and the scheme member will need to resubmit their application for protection on or after 6 April 2016.

Members who are not planning to take benefits between 6 April 2016 and July 2016 should wait and apply for protection using the online digital service which will be available in July 2016. This is because everyone who protects their pension savings temporarily must make a full online application from July 2016 and receive a permanent reference number to ensure their pension savings continue to be protected from the lifetime allowance tax charge.

Scheme administrators should note that temporary reference numbers provided through the interim application process will be in the following format:

For FP2016 this will be AJ followed by 4 digits – for example AJ1234.

For IP2016 this will be 4 digits followed by AJ – for example 1234AJ.

The reference numbers provided by the online application process will be very different from the temporary reference numbers provided through the interim process. This makes it easy for HMRC, scheme administrators and members to identify whether protection is temporary and needs to be followed up with an online application.

IP2016 – Amounts A to D

As we explained in Pension schemes newsletter 74 for IP2016, as well as basic information (name, date of birth and national insurance number) and confirmation that the member did not hold primary protection or Individual Protection 2014 at 5 April 2016, the scheme member will need to provide HMRC with amounts A to D and their total relevant amount. The total relevant amount is the sum of amounts A to D (A+B+C+D) below.

Amount A

The amount of pensions in payment before 6 April 2006, valued at 5 April 2016.

Amount B

The amount of benefits crystallised between 6 April 2006 and 5 April 2016, valued at 5 April 2016.

Amount C

The amount of uncrystallised pension savings in UK registered pension schemes valued at 5 April 2016.

Amount D

The amount of uncrystallised pension savings in relieved non-UK pension schemes valued at 5 April 2016.

Scheme members should ensure that these details are included and correct because HMRC will reject interim applications for protection with incomplete information or if amounts A to D do not add up to the relevant amount provided by the member.

b. Taking benefits soon after 6 April 2016

We are aware that some members affected by the reduction in lifetime allowance will want to or need to retire on or immediately after 6 April 2016 and that these members may not have received their temporary reference number, confirming protection, from HMRC.

Members in this situation may wish to:

• postpone taking their benefits until they have received a temporary reference number from HMRC or

• take benefits up to the standard lifetime allowance and defer taking their remaining benefits until they have received a temporary reference number from HMRC.

Alternatively scheme administrators can test members benefits against the standard lifetime allowance of £1m, pay the tax charge on the accounting for tax (AFT) return and the once the temporary reference number is obtained, re-calculate and then submit an amended AFT return to receive a repayment.

3. Pension flexibility – reclaiming over paid tax on death benefits

From 6 April 2016, changes to the tax treatment of certain death benefit payments mean that beneficiaries can reclaim overpaid tax deducted in year. We will provide three new forms for this purpose and these will be available from the new tax year.

Appendix 1 – FP2016 interim process application

I wish to apply for Fixed Protection 2016 using the interim application process.

I confirm that I will be taking benefits before the new online system is available in July 2016 and I know that to ensure that my pension savings continue to be protected, I will need to apply for a permanent reference number from July 2016.

I enclose the following information for you to consider my interim Fixed Protection 2016 (FP2016) application.

I confirm that as at 5 April 2016 I did not hold any of the following protections:

• primary protection
• enhanced protection
• fixed protection
• fixed protection 2014

I understand that if I, my employer or a third party make further contributions to my scheme I must notify HM Revenue and Customs and that my FP2016 will be lost.

I also know that if my pension scheme has benefit accrual, that in some circumstances FP2016 may be lost and that I am responsible for testing for benefit accrual. I understand that my pension scheme administrator can help provide me with information to help me carry out the test.

The information that I have provided is correct to the best of my knowledge and belief.

[Signature]
[Date]

Appendix 2 – IP2016 interim process application

I wish to apply for Individual Protection 2016 using the interim application process.

I confirm that I will be taking benefits before the new online system is available in July 2016 and I know that to ensure that my pension savings continue to be protected, I will need to apply for a permanent reference number from July 2016.

I enclose the following information for you to consider my interim Individual Protection 2016 application.

[Insert first name]
[Insert surname]
[Insert National Insurance Number]
[insert date of birth]

In addition, my total relevant amount is [insert value £] and is the sum of amounts A to D (A+B+C+D) below.

Amount A

The amount of my pensions in payment before 6 April 2006 was [insert value £], valued at 5 April 2016.

Amount B

Between 6 April 2006 to 5 April 2016, I crystallised benefits to the value of [insert value £], valued at 5 April 2016.

Amount C

My uncrystallised pension savings in UK registered pension schemes were valued at 5 April 2016 at [insert value £].

Amount D

My uncrystallised pension savings in relieved non-UK pension schemes at 5 April 2016 were valued at [insert value £].

I confirm that at 5 April 2016 I did not hold primary protection or Individual Protection 2014.

The information that I have provided is correct to the best of my knowledge and belief.

[Signature]
[Date]